‘A Buyers Market For Years To Come’ In Florida
The St. Augustine Record has this report from Florida. “(Realtor) Arnold DeLorenzo, a respected voice in the local real estate market for 40 years, said houses for sale here may stay on the market longer than the sellers intend. ‘We’re saturated,’ he said. ‘The (housing) market is definitely weakened.’”
“DeLorenzo said even mid-priced homes aren’t selling well now because there are just too many listed. ‘Our inventory is up five-fold over last year,’ he said. ‘We just don’t have the buyers. There’s no demand.’”
“A state study of the market from February 2005 to February 2006 indicated that in some parts of Florida, such as Punta Gorda, home sales are down 90 percent. ‘(That study also says) the Jacksonville market is doing well, but it’s flat,’ DeLorenzo said. ‘Some developers are taking $40,000 to $50,000 off the price of new homes. I just hope the market doesn’t go into a tailspin.’”
“‘The market can’t go straight up forever. This is actually a good sign,’ he said. ‘Everyone’s perception (of what their house is worth) was too high. That’s got to change.’”
“(Broker) Roy Barnes Jr. said much of the chill on home prices is caused by the “fear factor” caused by Hurricane Katrina along the Gulf Coast and by four hurricanes hitting South Florida. ‘I don’t feel that the values have dropped. Prices are being adjusted. Many properties were unrealistically priced,’ Barnes said.”
And the Naples Insider has the May report up. “Naples is currently a strong buyers market for most property types and price ranges. There are many instances where sellers have dropped their asking price by over 20%. Without significant price adjustments, trends suggests that Naples will be a buyers market for years to come.”
“Unlike second home buyers, investors were in the market for the profit potential and had no emotional tie to the property or the Naples area; just a financial tie. Once the slowing trend began to emerge, they wanted out and in big numbers. Beginning in November 2004 the area starting seeing record number of new listings added each month.”
“Year-to-date the pace of sales is mirroring year 2003, suggesting total sales for year 2006 will be 30% to 40% less than the previous two years. With a record number of homes for sale, trends suggest that unless bus loads of price-insensitive buyers start arriving, or prices drop significantly, or a combination of both, the Naples real estate market will remain a buyers’ market for a very long period.”
“Some sellers have to sell, and instances are appearing were they have sold at extremely low prices. I’ve seen some properties sell for 40% off of original list price and 25% off of peak prices.
“A comparison of actives (homes for sale) vs. pending (homes under contract and waiting to close) is a good measure of the health of the housing market. In a healthy real estate market, pendings might equal 50% of of homes listed for sale in the mid price ranges, and 20 to 25% in the higher price ranges. In the winter of 2005 that ratio was near or over 100% for many areas communities; an indication that the market was on fire. In April 2006, the actives vs. pendings ratio for the Naples area was in the 10% range. An indication of low buying activity.”
At first, I thought I would buy a condo in Florida. But, I think now I’ll wait for the bottom and just buy all of Florida.
most of it will be underwater (literally) in a few years, so what’s left shouldn’t cost you too much.
Off subject. Just wanted to say that I went to the Grand Canyon, Painted Desert, Petrified Forest, Meteor Crater, and Sunset Crater over the weekend.
Ben, you live in an area rich with beautiful scenery. But still looks like Flagstaff, etc is way overpriced. Thank you for such a wonderful blogsite.
To all, if you are able to visit these places - they are well worth seeing.
Flagstaff and Sedona are fabulous places. I’ve been going to Sedona every summer for years to hike and just chill out. It really saddens me to see all this junk being built around them in places like Bullhead City and Cornville.
Flagstaff is overpriced, but that will change. You should check out the classifieds. Flippers cutting prices on new homes left and right. Plus, there are over a thousand new homes being constructed.
I’ll offer $5 for FL by the time the hurricanes finish with the place.
Don’t forget the fires. Maybe they will pay you to take if off their hands.
Now is your ONLY opportunity to eat BBQ’d snail darter.
After inflation is done, more like $5million. But it’ll still be worth nothing.
This is just the beginning!
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
That quote never gets old.
I know this has been said one hundred times before, but its really amazing how much the market has changed in such a short period of time. I can’t stop thinking about how different the realtor-talk is from just over a year ago when the masses had to ‘buy now or be priced out forever.’ Simply amazing.
We’ve got a long way to go however. We are watching history unfold.
“We are watching history unfold”
That is so true in so many ways - most of those ways (all of them?) do not auger well for this poor tattered nation. Lets hope we don’t lose our perspective.
Perspective? Like the 3 b.r. 1500 s.f. house in San Diego for $500k. Now there’s perspective. Enjoy the ride, it’s a long way down to get some perspective.
Last year $500k in SD wouldn’t even get you 1500 sq ft in my “pocket” neighborhood or more than one bathroom.
500K will get you a nice decrepit home in San Ysidro with a great view of TJ and a lot of friendly tunnel workers under your home.
$500k in my area might get you a run down 1 bed condo. A 1500 sq ft run down single family home is $1M
See from the Associate editor of the WSJ editorial page
Seconded, Stever. Superb article. Paul Craig Roberts is one of the few conservatives worth reading.
I think the land shortage might actually come, but that will actually cause prices to go down to zero.
If nothing is done to reduce green house gas emission, the whole state of FL will be underwater within 50 years.
(South Florida,’’ he said, ‘’is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05)
it’s getting tougher to be the first one to post that!
17 cm isn’t going to inundate Florida. The Decadal Oscillation however just might. The biggest problem is that Florida has become urban. That’s not “bad” but it isn’t what people -used- to move there for. The new in migration will be ethnic, urban, younger, poorer. Again not bad but an urban Florida is a humid Atlanta, no longer attractively advantaged. Urban also means expensive, another long standing advantage lost.
You hit the nail on the head. I think the last 10 years saw the most changes.
That’s exactly what will happen Robert. There are two-Florida’s today. One is the rich, yuppie, urban areas and the second is the poor white trailer trash. The two Floridas are diverging more and more and in the future there will be such start variations between the two it could lead to the extinction of the ‘cracker country’ Florida.
I see this every day. One of the starkest differences I’ve seen is in West Palm Beach. Imagine sitting in a nice restaurant where 1/2 the clientele is driving Lexus, living in gated communities and wearing suits while the other half is wearing camflauge and driving beat up pickup trucks and living in trailers.
The regular working folks in Florida (poor white trailer trash) are also being squeezed from above by the lesser white-collar workers and from the bottom by the mexican migrant workers. A whole way of life is at stake. It will soon be extinct.
The poor white trailer trash are packing up and moving north. In South Florida they have have been readily replaced by all the poor immigrants from Haiti, Dom Rep, etc. I moved here last summer and was amazed at the changes in the Demographics over the last 10 years. Miami-Dade has the highest level of child poverty in the United States. This part of the state will soon be a mirror image of any major LATIN American country with all of the associated problems. I want to leave so bad…nice place to visit, but I need to get back to the U.S.
I only wish we had the name of this realtor. I think we need to write the author of this story to have him do a follow up and specifically ask this realtor why he said that.
“I only wish we had the name of this realtor. ”
Ask and ye shall receive:
In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
”South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past.”
– “Trading Places: Real Estate Instead of Dot-Coms”, by Motoko Rich and David Leonhardt (New York Times, March 25, 2005)
Thanks!!!
If I was King I would put that quote up on a billboard outside Mr. Shuffields house.
Or just send him a friendly reminder instead:
http://www.ewm.com/agents/profile.asp?pid=0235832
That’s one of the reasons Ben’s blog is so great — really quick and telented bloggers. You lie, you die.
Ha ha. The title for the St Augustine article is “Housing Cool — For Now, But Expected to Heat Up Again.”
Heat up again when exactly??
Oh well, there’s always global warming. Maybe that’s what he meant.
Remember: Prices aren’t falling, they’re being “adjusted.” Ha-Ha. That kind of talk never gets old, just like the quote above. Don’t miss out on those quotes from WCI’s earnings report this morning, by the way. Here’s one:
“During the quarter, we did not see the seasonal lift in demand for homes in most of our Florida communities”
Then there was this:
“With traffic levels off approximately 50% in Florida, we also have delayed the release of several towers from the first and second quarters to later in the year, and have reduced the number of towers that we expect to introduce to the market this year to 11 to 13 compared with our initial expectations of 15 to 17. While in some instances in the past we enjoyed tower unit presales of as much as 70% to 90%, in the current environment, we expect a lower level of presales prior to construction commencement, generally in the 50% to 60% area, which is more consistent with our longer-term, historical pre-construction absorption.”
A 50% drop in traffic. 50% PEOPLE. New orders plunged almost 52% YOY for regular houses in Q1 and 71% for towers/condos. (these are unit volume not dollars). That’s not a “Soft landing.” That’s a total meltdown.
That’s crazy still. They still expect to sell their stupid condos. They will eventually need to cancel ALL condo construction. And delay all they can.
Traffic is down 50%, real people who want to actually buy to live in one of their condos is down from 10% of available space (with the other 90% speculators) to 0%. Wait until people realize they don’t have the HELOC money they thought they did for their little “investment”.
Housing is so hot it’s causing brush fires
http://www.local6.com/news/13508722/detail.html
“House on fire” is a popular theme in the Noorth Florida news right now. There’s heating up for you.
‘I don’t feel that the values have dropped. Prices are being adjusted.’
I hope politicians are paying attention to all of this. If they’re looking for a pool of recruits to be their new spin doctors, there will be no better place to look than the sea of unemployed realtors. These guys are good.
I’m glad you posted that for me because I was thinking the same thing. I have to say this kind of double-speak offends me highly.
To me it’s a reflection of either: 1. how ignorant or stupid they think we are that we can’t comprehend English, or 2. how much smarter than everybody else they think they are that they can get away with such statements and nobody will catch it.
If it weren’t so offensive it would be comical. It’s like saying: “Pork rinds aren’t fattening, they just cause you to gain a few pounds.”
Huh?!?!
Double-speak, as Orwell once wrote, is the lingua franca of politics.
Yes, Brian, they think we’re stupid. Understandably so.
If you can get a society to transfer most of its wealth to the top, excite it every ten years or so with a little fast bubble money, lie it into a profitable war as needed, bury it under world-historical levels of debt, continually diminish its expectations for employment and education and retirement and clean air and water and civil liberty, and then–for laughs–whip it into frenzies of partisan venom for the “elections” that promptly founder in banana republic-style scandal, then you might just have…as they say in the rackets…a live one.
Properly seen, the housing bubble is a political machination, an act of ruthless economic planning held together by lust, spit and larceny. It’s spent, at last. Now, our plutocrats have to go back to the drawing board.
What will they
think of next? The signs are, heh, ominous: http://msnbc.msn.com/id/12692606/
Well if we are still talking about the South Florida market, # 1 is correct…, most of the folks around here can’t comprehend many English idiosyncrasies. After all, English is their second language.
I don’t like realtors, but I’m going to offer an explanation for this comment. I suspect the guy meant that it’s the same house, same neighborhood, same view, same crime level, same school system–in other words, it offers the same value proposition now as it did 12 months ago. It’s just that value proposition isn’t worth as much, hence prices are being adjusted.
I fell on the floor laughing. When he says the value hasn’t changed I guess he means the houses never were worth that much!
I wonder if he was saying that the last couple of years.
Anyone remember the moron that said something like, ” The prices have gone down, NOT the value”, or something like that? Wasn’t she a Fl realtor? LOL
That quote actually sounds reasonable to me. It’s the proposition that prices more than doubling in the last few years meant that values were going up is the one that I found abusrd. If we assume that the value is the same as in ‘99 how far could prices adjust?
Sales down 30% to 40%? Interesting number, don’t you think? Fact is 30-40% was the percentage of homes being bought by flippers down there and in other bubble markets over the last couple years.
Having 30 to 40% of all these residences bought over the last 2-3 years all of a sudden show up in inventory is going to be an incredible shock to the real estate market (and this shock is currently beginning to dawn on everyone). Is it just me or are we seeing more and more of these stories now? With months and months of inventory on hand, and flippers and I/O or Option Arm short term dwellers (people that actually live in the house who thought they could cash out before the loan resets) will be desperate to unload all at once. Things are going to get bloody as everyone rushes for the exits. People are going to look at the staggering amounts of inventory and the same herd mentality that got everyone to buy in the first place will start pushing in reverse.
The mantra will eventually be “sell now or be in $100,000s of debt forevery and be totally incapable of ever borrowing for a home.”
I know I’m preaching to the choir here, but this all seems so obvious now. If 30 to 40% of all the homes bought in bubble markets over the last 2-3 years were from people that neither have the intent to live in them or have the ability to pay the financing costs, then there’s going to be a helluva lot of inventory flooding the market all at once. Something has to got to give, and there’s no way that any of these markets will be able to come up with 30 to 40% REAL buyers in a relatively short period of time. If 30 to 40% of the inventory was sold to flippers in some bubble markets, all these localities will have to find the equivalent of 30 to 40% more residents for each year to buy these places. If this rate lasted for 3 years (and 1/3 was bought by flippers), then right off the bat you’re looking at a year supply of homes all hitting the market at once.
“If 30 to 40% of the inventory was sold to flippers in some bubble markets, all these localities will have to find the equivalent of 30 to 40% more residents for each year to buy these places.”
didn’t you know?
(input your area here) is attracting boomers and immigrants and overseas investors, and has a diverse economy and everbody wants to live there!
The argument NEVER made sense as to why RE should suddenly skyrocket 20,30,40 even 50% in one year. It was clearly a mania then, and no rational argument ever made any sense.
We are now seeing what was always the obvious conclusion that anybody could have figured out, had they bothered to do any research.
The nice thing is that all this new inventory will soon drop in price, and we will have what we always wanted: affordable housing. it will be painful for those that bought at the top, however, and might throw us into recession… but that’s the free market right? Allow people to be as stupid as possible. Luckily we’ll bail them all out with our taxes!
clouseau
Nothing free market about a government bail out. A free market relies on rational behavior in the long term (even in the face of short term variations). Government subsidies promote irrational behavior (Like moving onto a sand strip in a hurricane zone).
Sales down 30% to 40%? Interesting number, don’t you think? Fact is 30-40% was the percentage of homes being bought by flippers down there and in other bubble markets over the last couple years.
Actually, if there was 30% flippers, and they’re now leaving the market, you need 60% more buyers, not 30% more buyers.
Oh yes, there will be blood.
TRich …Right on . The investors were all tripping over each other to buy, in the last say 3 years, and now they are tripping all over each other to sell . Flippers created a false market …flippers created a false market …they didn’t even think about who they would be selling to .
“Giving back” 6-18 months of presumed appreciation is not a buyers market. Even y-o-y median or average price declines are not a buyers market. A buyers market is when same house sales prices are 20% below last sales prices. All we have now is the end of an extreme sellers market. Sellers aren’t anywhere near close to losing money on sales. Even flippers are still getting out with nothing more than bruises. We haven’t even started eating into the “but I also got to live in a nice house for almost free” yet. “Pain” is not the absence of “pleasure.” Golden West sold for a $9 billion premium? The whole financial component has gone as insane as the housing market they service.
I agree. I guess it all depends on what is meant be a ‘buyers market’. If they just mean more sellers than buyers, then it will be a buyers market for a long time. But if they mean that it’s a good market for the buyer, and that bargans abound, then it won’t be a buyers market for a long time. 1 to 4 years I would say, depending on just how big an impact all the crazy financing has on forcing a correction. It may happen faster this time because there are so many more “candidates for foreclosure” out there.
Anyone know what those phoenix numbers are yet. Are we on our way to 50k by early June.
I live in N Scottsdale and it seems there are houses for sale everywhere. I know of one that has been on the market for about 6 months and has been reduced only 80K. My girlfriend bought the same floorplan less than 2 years ago for 459K. About 18 months later the neighbor lists for 780k, not it sits vacant at 700k with no signs of moving. I don’t think it’s worth more than 500k.
The girl I play golf with still has her house for sale in Cave Creek. Reduced from 419K to 384K, stil on the market over two months now. There are now 500 houses for sale in Cave Creek. Queen Creek is now over 2600. Any total numbers for Phoenix out there?
Scottsdale is hovering about 5,000….. up from about 4,400 in February.
“I don’t feel that the values have dropped. Prices are being adjusted. Many properties were unrealistically priced”
I’m not obscenely obese. I just need to lose 500 pounds to get back to my target weight. My scale just says I’m unrealistically heavier than normal.
How big is the house and lot for 459K or 700K or whatever it is?
In Central GA you buy 5 acres and a 3000 sq foot brick house for 400K
I’m not sure how to post a link but here is the web address.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=2423379&page=1&property_type=SFR&mls=mls_phoenix&cKey=84j6m8sv&source=ARMLS
Best way to post a link and avoid the too-long format you see is to use a site like http://www.tinyurl.com — copy the long link, paste it into the spot provided and tinyurl gives you a very tidy little link that fits just about anywhere.
400k will get you 1000 sgft on a 5000 sgft lot here. Guns and Ammo a must.
(The mantra will eventually be “sell now or be in $100,000s of debt forevery and be totally incapable of ever borrowing for a home.”)
with so many people buying with zero down, might not have any equity and with a toxic loan, I don’t see how the gov’t isn’t going to step in and make up the difference somehow.
take california, the media price is something like $500,000, no? how many people who sell have little equity and will be $50,000 in the hole with a 10% drop. $100,000 in the hole with a 20% and $150,000 in the hole with a 30%, which most people here don’t find unreasonable. people don’t have that much savings, they’ll have to liquidate their stock holdings, if they have that much.
it looks like the markets will seize up just because a person to wants to move up can’t sell their existing house.
I don’t see how the gov’t isn’t going to step in and make up the difference somehow.
The banks will get the bailout, but the people will be handed a tax bill.
yeah, and then people will get hit with a tax bill for the forgiven portion, right?
bingo
Maybe THAT’S the part where the rest of us get screwed — the government ushering in a limited-time “forgiveness” of the loss relative to 1099s. Yuck. I suppose that is better, though not much, than the government taking over the housing and becoming a semi-permanent landlord.
“it looks like the markets will seize up just because a person to wants to move up can’t sell their existing house. ”
I think that’s one (more on the optimistic side) scenario. Another one that isn’t quite as cheery is that they will be forced to sell at a loss after their ARMS/IO/NegAm loans adjust and they can no longer afford their payments. I do agree that so many people will cry and scream that some up and coming politician will try and come to their rescue with some kind of bail-out program for FBers. When/If this ever happens, and prudent tax payers are made to pay for the stupidity/greed of a mass of individual FBers and “investors”, I will seriously consider moving out of the country. At least in Canada, EVERYONE benefits somewhat from Socialism…not just stupid people who have no concept of personal responsibility. Or I suppose I could always teach English in Asia somewhere….
“the markets will seize up ”
Like running out of oil in your car, the motor just stops.
What will happen is that once prices retreat there will be plenty of sellers that are still in positive territory who watched the bubble come and go and can still sell at a profit (lots of stories floating around about what their house “used to be worth”). While others who bought late into the bubble will be stuck in their homes (i.e. home slaves) because they simply can’t afford to sell at lower prices. Still others who aren’t as financially responsible or some who are down on their luck will have to turn in the keys and foreclose. Downward pressure on resale home prices willl be forced by the new home builders who will keep churning out houses and lowering prices to the new market level, because that is what they do. Just like GM and Ford…they are losing money, but are still cranking out cars.
“I don’t feel that the values have dropped.”
I agree. But I don’t feel that the values ever went up in the first place.
LOL
I really should read the whole thread before I start posting comments. I said the same thing in response to a post higher up.
Minyan Mailbag (Fil Zucchi, former bankruptcy attorney, now hedge fund manager - my kinda guy!)
Since we don’t do advice in the “ville (in response to a reader question re a short position the HB vis-a-vis fed mtg tomorrow), let me non-answer your question this way: unless the Fed tomorrow starts lowering rates and signals it will continue to do so, I am not sure that the prospects for the housing market will change much. Can the stocks pop? Sure, a lot are oversold. But the housing bubble is done. The speculators who drove prices and sales for the last two years are either “all in” (and drowning) or looking for the next asset class. And I think it is even less likely in an asset class such as housing where getting in and out is time consuming and costly. Moreover, if you listen to the Oracle, housing-related loan problems for banks are fast approaching. If he can see it, the banks can see it and 125% LTV option ARMS “you don’t really have to pay me back” are disappearing fast.
IMHO which, as most loyal Minyans know was early by about two years so use it carefully, if the housing implosion were a baseball game, we are in the top of the first inning.
““(Realtor) Arnold DeLorenzo, a respected voice in the local real estate market for 40 years, said houses for sale here may stay on the market longer than the sellers intend. ‘We’re saturated,’ he said. ‘The (housing) market is definitely weakened.’”
STOP using euphemisms. The market has declined. The realtorspeak is sickening.
David
http://bubblemeter.blogspot.com
(The biggest problem is that Florida has become urban. That’s not “bad” but it isn’t what people -used- to move there for.)
I agree. When I went to Disney World, I spent a little time in a wildlife preserve, and finally understood the former appeal of the place. I suppose Miami Beach is cool, but Florida really isn’t a resort area anymore. And all the orange groves are being paved.
Exactly. The “real” Florida is the tagline for the state park system. Florida has become so perverted by greedy developers who want to build entire cities in the middle of nowhere. Drive on I-4; halfway between Tampa and Orlando (east of Lakeland) is a sign proclaiming the future city of Orlampa. In 20 years it will be a suburb of Lakeland and the beautiful pastures and Green Swamp will be drained and the entire area will be paved over and covered with big box stores and cheapo housing subdivisions.
There are two-Florida’s today. One is the rich, yuppie, urban areas and the second is the poor white trailer trash. The two Floridas are diverging more and more and in the future there will be such start variations between the two it could lead to the extinction of the ‘cracker country’ Florida.
home price expressed in gold just took another hit.
Dollar hits 91¢ US as gold reaches $700 US an ounce
http://www.cbc.ca/story/business/national/2006/05/09/gold.html
This sure doesn’t sound like a “buyers” market. From what everyone is saying, there is a good chance prices might keep dropping over the next few years. It won’t really be a good time to buy until future price appreciations are pretty certain. it is NO bargain buying a home today that is worth less tomorrow, regardless of the discount, or how much the seller reduced the price.
Semantics. What “buyers market” means right now is that at the negotiating table, buyers have the advantage.
“Buyer’s Market”, whatever the definition, is vague beyond usefulness. It doesn’t tell the story, which is why I think unRealtors don’t mind using it. They can still do well telling sheeple it’s a buyer’s market. In their translation it means “buy now”, which is of course what they really want.
How about “declining market” or “loser’s market” or “poison market” to give the proper connotation?
Other ideas?
Down with “buyer’s” market!
He’s saying that prices are insanely high, that houses are unaffordable… therefore it is a buyer’s market.
WTF?!
Wrong, WRONG, WRONG! It’s a buyer’s market only when prices are LOW!
Argh. These media morons are driving me slowly insane.
What we have now is a stalled market, where sellers are desperately clinging to the fantasy that they can still sell their POS for a king’s ransom. They’re stubborn and, for the most part, won’t lower their prices enough (yet). Buyers are simply staying away, waiting them out. The market is stalled.
Give it another six months, with ARMs resetting, mass sheeple psychology turning down, and the weight of carrying costs crushing floppers by the thousands, and then prices will drop more precipitously because many sellers won’t have a choice. Let those serious price drops add up to real money (I’m talking a 25-40% drop in the market) and then we can start to talk about a buyer’s market but not until then!
If I see one more real estate person talk about how we’re in a buyer’s market, it may be time for a very selectively performed killing spree. “Police reports indicate that the last words from each of the victims were, ‘It’s a buyer’s market here in…aarrgghhhgggllleargghhh…’”
“‘The market can’t go straight up forever. This is actually a good sign,’ he said. ‘Everyone’s perception (of what their house is worth) was too high. That’s got to change.’”
This is exactly what all the Internet stock “analysts” were saying in mid-2000 when the Nasdaq started its collapse. This is a good sign, we needed this to happen, the healthy companies will survive, etc.
We all know how that turned out. It’s amazing how similar this is to the dotcom collapse.
Well, one part of that turned out to be correct: the healthy compan ies did survive. It was the 95% that were unhealthy that was the problem!
Fair enough, but even the AMZNs and EBAYs took huge haircuts before bouncing back. I think AMZN went from $115 to $6. CSCO went from $80 to wherever it is now and is dead in the water.
I think the bubble burst will be similar to Japan’s, 12 years of declining prices with deflation pressure. There is little liquidity in Real Estate.
OT:
AOL laying off 1,300, downsizing call centers
“Move affects 7 percent of company’s workforce worldwide”
Here we go again. It’s amazing how history repeats itself.
Housing slowdown appears to be nationwide.
http://online.wsj.com/article/SB114710606645746734.html?mod=yahoo_hs
“Housing Slowdown Appears
To Be Spreading Nationwide
By JANET MORRISSEY
May 8, 2006 5:17 p.m.
NEW YORK — There are signs a housing slowdown that has gripped certain high-growth markets during the past few quarters, is now spreading nationwide.”
sweet lyrics. i love that song.
NEW TOPIC
UK fell 5-10% from 5/04 to 10/04
since then zip,nada no crash
how are we different?
more leverage
little savings
most likely more inventory
Higher debt to income ratios.
Higher LTV ratios.
Larger number of consumer expenses that consumers in US cannot control-no public transport=gas prices hit everyone harder, no public health = insurance costs directly to consumer.
Increased mobility required of US workers-lower % of people employed by govt/far worse unemployment benefits/easier to fire people=when someone loses a job they are more likely to have to move to take it, so will be more desperate to sell the house.
UK is a poodle ..it (like OZ) didnot fall as much in 2004-05 as US market was gung-ho.
W/ US downturn, things will get messy very fast.
People in GB move far less than Americans do. We are a very mobile society, it is not uncommon for us to move across town, across state, or across country, often many times in our lifetimes.
the typical Englishperson is not as mobile, and moves far less often.
I lived in France for some time (Toulouse, Paris), and have spent extended periods of time in many European countries (months) and they are all shocked to find out how mobile we are.
The relative lack of turnover helps to save those markets… as it’s rarer that people ‘have’ to move.
also: If we had 2 years of flat prices we’d be toast. (from 5/04 to 5/06 was 2 years). Too many US people are barely treading water on their IO Option ARMS that will reset in the next 2 years.
Make no mistake, a ’soft’ landing where we simply have to wait for incomes to catch up will be tremendously painful for millions of homeowners. Many places like California will need to wait more than 20 years before income growth would make home prices reasonable again. Imagine putting $4,000 to $5,000/month towards a home that will get NO appreciation for 20 year!
yech
clouseau
more speculation
Dead-cat nonbounce.
Zero in 1½ years is still negative in real terms.
All mortgages in the UK are ARMs and adjust more frequently. Thus more people suffer the consequences of higher rates faster, and the extent of the bubble is tempered compared to here.
0% gain in a couple years when inflation is probably really 10% + is death.
It isn’t over yet.
People keep failing to discuss the “nuclear” option for housing; owners just walking away from their toxic loans and saying enough is enough.
Banks cant go after everybody if the numbers get large enough. If they seek to destroy their own customers simply to force them to live in a house, then the economy has much further to sink than I thought.
I think we are certainly still in the denial phase, like the summer of 1987 or summer of 2000 (or summer of 1929). Amazing how all the bubbles have the summer “moonlighting” period before the end.
But the nuclear options is probably the passover point from denial to grief.
People keep failing to discuss the “nuclear” option for housing; owners just walking away from their toxic loans and saying enough is enough.
That’s because it’s no longer an option - or haven’t you read that new bankrupcy bill the republicans just passed? Bankrupcy is for the most part no longer a safe haven. And even if they forgive your debt, the IRS then owns you.
It’s my understanding that “Giving the bank the keys” has nothing to do with bankrupcy. In some states like California, although not my home state, a first mortgage is secured only by the property. You give them the keys, they send you a 1099 (the IRS regards any deficiency as income) and kill your FICO and that’s all she wrote. No bankrupcy filing is required. Where I come from, the bank gets a defficiency judgement from the court and comes after the rest of your assets. If you’re insolvent bankrupcy is your only option.
do people put more money down in Europe? I thought I read that a lot of people pay cash in Europe.
Not in the UK. 5% down is pretty common there and has been for several decades.
Amazinghow these buffoons only think prices can iappreciate 100% in 5 years and then only deflate 10% before reinflating. In that case in 5 years the average home would be almost 1 million and 2 million in 10 years.. Then there would be 3 people left in Florida that could buy a home unless 2 die of old age and one moves out.
When I walk outside, it smells like BBQ. Could that be from a few suburbs going up in flames?